Retirement Financial Planning / estate posturing with thought of becoming SINGLE (Widow (er)) in near future.

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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StealthRabbit
Posts: 170
Joined: Sat Jun 13, 2009 1:25 am

Retirement Financial Planning / estate posturing with thought of becoming SINGLE (Widow (er)) in near future.

Post by StealthRabbit » Tue Feb 12, 2019 12:10 am

Retirement Financial Planning / estate posturing with thought of becoming SINGLE (Widow(er)) in future. 3-5 yrs horizon (or actually anytime is possible!)

We have the trusts / beneficiaries / pour-over wills..., but seems there is a LOT more prudent planning needed with imminent demise of one of us lurking...(and for us all...some sooner than later).
Our 'final / final' distribution goes to our DAF.

Single filer status could be a real wake-up for a significant 'taxable' distribution / RMD, T-ira, 401K..

Items in Trust should get 'step-up' basis (equity accounts), but IIRC, the primary earner's T-Ira, Roll-over, 401k is NOT in the trust.

Do 'qualified' pre-tax retirement accts get 'step-up basis' on death, or are all withdrawals fully taxable? (at new single filer rate?) (likely, since there is really no 'basis' for pre-tax accts)

Plan B?
Convert like mad to Roths? (as possible /makes sense)
I have been doing conversions in low tax yrs for 15+ yrs, but could definitely step that up (age 65 - age 70.5) NO income yrs!
Take taxable distributions in yr of death / while still filing Joint? (before close of Dec 31).

Any suggestions referrals / experience / guidance is appreciated.
No inheritance / life insurance / significant windfalls expected. BIG (huge) bills (medical) are likely! Funeral... already prepared for this minor expense... <$800 via funerals.coop
https://funerals.coop/
I have already had the experience of 'cross country' corpse delivery (if needed / required) . FREE USA transit permit :wink: (Excluding Nebraska :twisted: ) actually (9) states have some type of restriction, but sometimes only in Issuing Burial transit permit...(get your transit permit elsewhere) https://funerallaw.typepad.com/blog/201 ... ctors.html

I'm sure many of you have lived this nightmare, so my heartfelt condolences.
Your info / experience will be useful for us waiting for the shoe to fall.

OhioGozaimas
Posts: 294
Joined: Wed Sep 12, 2007 2:27 pm

Re: Retirement Financial Planning / estate posturing with thought of becoming SINGLE (Widow (er)) in near future.

Post by OhioGozaimas » Tue Feb 12, 2019 1:03 pm

What are your current ages?
Map out your future – but do it in pencil. – Jon Bon Jovi

JBTX
Posts: 4582
Joined: Wed Jul 26, 2017 12:46 pm

Re: Retirement Financial Planning / estate posturing with thought of becoming SINGLE (Widow (er)) in near future.

Post by JBTX » Tue Feb 12, 2019 2:15 pm

Pre tax retirement assets do not get a step up. They will require RMDS using an RMD schedule that spans the life of the inheriting party. RMDs or any additional distributions will be at ordinary income rates.

InMyDreams
Posts: 461
Joined: Tue Feb 28, 2017 11:35 am

Re: Retirement Financial Planning / estate posturing with thought of becoming SINGLE (Widow (er)) in near future.

Post by InMyDreams » Tue Feb 12, 2019 7:46 pm

Surviving spouse may sell a residence (must have lived in it 2 out of last 5 years) using the full exclusion of $500K. Must sell within two years.

https://www.kiplinger.com/slideshow/tax ... index.html

Kiplinger gives other ideas, too.

So sorry for this difficult time.

Topic Author
StealthRabbit
Posts: 170
Joined: Sat Jun 13, 2009 1:25 am

Re: Retirement Financial Planning / estate posturing with thought of becoming SINGLE (Widow (er)) in near future.

Post by StealthRabbit » Wed Feb 13, 2019 10:07 pm

OhioGozaimas wrote:
Tue Feb 12, 2019 1:03 pm
What are your current ages?
~age 60, (in a 'Community Property' & no income tax, but high death tax state) $2.193 million death tax thresh-hold
InMyDreams » Tue Feb 12, 2019 7:46 pm

Surviving spouse may sell a residence (must have lived in it 2 out of last 5 years) using the full exclusion of $500K. Must sell within two years.

https://www.kiplinger.com/slideshow/tax ... index.html

Kiplinger gives other ideas, too.
thanks for the link and info.

Sure ain't pretty! (tax planning as widow(er))
Stuff in a Trust / Spousal beneficiary = "Step-up basis" --- (Stocks / equities / tangible investments / RE / investment properties),
Taxable "qualified Accounts" will result in a significant higher future tax obligation (Single vs joint)
Year of death = 'grace period as Joint filer' (use it wisely)
If dependent kids at home = Head of Household filing status

to-do:
1) Must plan for RMD's, @ Single filing rate (ouch)
2) No desire to sell home, but survivor will get a 'step-up value' for the $800k+ gain (Ours is in a National Scenic Area / protected view / no new neighbors allowed; home was designed and built by us (brick by brick) so no desire to leave the view! )
3) No life insurance payouts (self insured)
4) The Tax Man 'Cometh' (similar to property taxes ... up over 300% since we retired 15 yrs ago)

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